President Donald Trump has upped the ante in the trade dispute with China, threatening now to impose tariffs on all Chinese goods entering the United States.
New tariffs are expected soon on US$200 billion (S$276 billion) worth of imports from China and these will be in addition to the US$50 billion already in place.
China has retaliated against those already in effect with tariffs of its own against US imports targeting, among other things, agricultural produce and seafood.
On Friday, Mr Trump said there could be US$267 billion more. "I'm being strong on China because I have to be," Mr Trump told reporters on board Air Force One on a flight to North Dakota. "They're taking US$500 billion out a year," he said. "Can't let that happen."
"Nobody has ever done what I've done," he said. "And the US$200 billion we're talking about could take place very soon, depending on what happens with them. To a certain extent, it's going to be up to China."
"But we've taxed them US$50 billion - that's on technology. Now, we've added another US$200 billion. And I hate to say this but, behind that, there's another US$267 billion ready to go on short notice, if I want. That totally changes the equation." The combined amount would cover the value of all goods China ships to the United States.
"I don't think this magnitude of tariffs has been priced into the markets," Ms Lara Rhame, chief US economist at FS Investments, told Bloomberg Television. The strong performance of markets over the past few months "keeps getting disrupted by news on trade" and "it's just another indication we're not out of the woods yet", she said.
The President is banking on the strong US economy - with unemployment at record lows - to take the edge off the damage to the US itself in the face of a trade war. The higher price of Chinese products will soon start to bite American customers; the higher cost of inputs from China is already hitting some small and medium industry sectors; and retaliatory tariffs on American agricultural exports to China are hitting American farmers.
Mr Trump appears to be ignoring calls from American industry to take his foot off the tariff pedal. Last Friday, over 150 industry associations and four major tech companies wrote to the US Trade Representative urging moderation or requesting exemptions from tariffs.
The administration has a greater goal than just driving down the yawning trade deficit with China - to force Beijing to open up its market to American businesses, and curb its acquisition of American technology.
Separately, White House economic adviser Larry Kudlow told CNBC on Friday that Washington wanted to build a "coalition of the willing" to take on China that would include Japan, the European Union and other allies. "The Chinese, you know, may find themselves more isolated if they don't come into the global process," Mr Kudlow said.
Analysts do not see any resolution of the trade dispute until after the US has its mid-term election on Nov 6 and, possibly, until early next year. China will wait until internal pressure builds on Mr Trump, analysts say. In Beijing, Professor Hong Tao from the Beijing Technology and Business University dismissed Mr Trump's latest threat as an intimidation tactic.
Professor Yu Miaojie, deputy dean of Peking University's National School of Development, also felt that tariffs on US$267 billion of Chinese goods would be quite unlikely.
He pointed out that 23 per cent of the impending tariffs on US$200 billion of Chinese imports targeted consumer products. "If the US$200 billion tariffs are imposed, American consumers will see that prices of consumer goods increase significantly," he said. "If that is the case, voices of opposition (against any further tariffs) will definitely strengthen."
• Additional reporting by Danson Cheong
Correction note: This story has been edited for accuracy
